Visa (V) Stock Rises 4% on Strong Consumer Spending

Source: Kikinunchi /

Amid a decently positive session in the major indices, Visa (NYSE:V) stock has Wall Street thinking good thoughts following Tuesday’s fiscal fourth-quarter earnings disclosure. The company delivered better-than-expected results based largely on Americans advantaging the relatively strong dollar. As a result, V stock is popping up by 4% today.

According to Reuters, Visa’s net income came to $3.9 billion for Q4, or $1.86 per share. The outlet explained further that, excluding items, Visa “reported a profit of $1.93 a share, beating estimates of $1.86, according to Refinitiv IBES data.” On the revenue front, net sales also increased 19% year-over-year (YOY) to $7.79 billion. However, operating expenses jumped 20% to $2.7 billion as well.

On top of this, Reuters noted that transactions processing increased 12% on a constant dollar basis to 50.9 billion in fiscal Q4. “The substantial growth in processed transactions is a good indication that inflation isn’t the primary driver of increased spending,” said Bankrate analyst Ted Rossman

Fundamentally, travel sentiment seems to have represented a major catalyst for Visa during Q4, with Americans traveling to international locations to splurge on shopping and entertainment. On a post earnings call, Visa CFO Vasant Prabhu noted that travel from the U.S. to “all geographies” is increasing consistently.

V Stock Still Faces Forward-Looking Questions

Despite the positive results associated with the fiscal Q4 disclosure, V stock still has some ways to go. For instance, although outbound travel from the U.S. increased, a stronger dollar also imposes pressure on inbound travel. According to Prabhu, “The strong dollar and delays in visa issuance from some countries appear to be impacting travel into the U.S.”

Another factor that might raise eyebrows regarding V stock centers on management’s forward economic outlook. Essentially, Visa did not overtly adjust its forecast to reflect recession risks. Prabhu elaborated:

“As we’ve said before, we are not economic forecasters […] Clearly, there’s a high risk of a global recession, but we do not have a specific point of view on if, when or the kind of recession we might have.”

The CFO added that, Visa is “assuming no recession” when it comes to internal planning. However, the company is maintaining vigilance. The credit card provider also has “contingency plans in place” should an “economic or geopolitical shock” impact the company.

So far this year, V stock is down by about 6% year-to-date (YTD). That’s a far better performance than the major indices, although investors may still be in a “show-me” mode.

On the date of publication, Josh Enomoto did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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